If virtual currencies become more widespread, will the traditional national currency disappear?

If virtual currencies become more widespread, will the traditional national currency disappear?  

 

The topic of cryptocurrencies such as Bitcoin is making news. Unlike ordinary currencies, virtual currencies do not have a government agency (central bank) that artificially controls the amount of circulation. However, by protecting the transaction records of virtual currencies from the past to the present with cryptographic technology so that they cannot be easily tampered with, it is possible to prevent currency forgery and theft. In addition, international remittances are cheaper and easier online than through traditional banks. In addition, Bitcoin, which is a typical virtual currency, is a very convenient currency that can be used for payment as consideration for shopping and eating and drinking at some stores overseas and in Japan. Taking advantage of this popularity, many people have virtual currencies in anticipation of the rising prices of virtual currencies.

Cryptocurrencies that lack the three major functions that money should meet will not be able to replace the Rupees and the dollar.

Since virtual currencies such as Bitcoin are recent topics, they have not appeared in textbooks such as "financial theory" and "finance theory" studied at university, but the actual situation and future of virtual currencies are based on the analysis methods and concepts learned there. You can get to know me to some extent.

First of all, cryptocurrencies will not replace traditional national currencies (such as the rupees and the US dollar).

If virtual currencies become more widespread, will the traditional national currency disappear?  

Cryptocurrencies seem to be a companion to money (money) from the name, but the third value preservation function among the three major functions that money should satisfy, is "value scale function, exchange means function, value preservation function". Only works outstandingly. To satisfy the previous two functions, the number of shops where you can shop using Bitcoin is increasing recently, but it cannot be used for general shopping payments yet. This is because virtual currencies do not have general acceptance as legal tender such as the national currency used in each country (no one can refuse to receive payment by law in that country).

If it is only the function of storing value, money and currency are just names, and the actual situation is the same classification as financial products. However, ordinary financial products are issued as a loan book of money, and the value of the financial product is determined by the return of money to the financial product holder at the time of future repayment. In addition, among financial products, precious metal currencies such as gold have intrinsic value as precious metals. Cryptocurrencies, like banknotes, do not have intrinsic value and do not have the maturity (repayment deadline) of ordinary financial products.

So why do people buy such cryptocurrencies? In other words, what value do cryptocurrencies have? It was supported by blockchain (public transaction ledger system) technology. It is worth providing us with a cheap, fast and simple international money transfer service. The traditional international remittance service by banks is supervised by the governments of each country and checks whether there are any mistakes or frauds at the remittance source or destination, so the remittance process is inevitably costly and time-consuming. The convenience (convenience) suitable for this international remittance of virtual currency is worth it. In addition,

If virtual currencies become more widespread, will the traditional national currency disappear?  

"mining" is a form in which the virtual currency is additionally supplied as a reward to the person who first finds and reports the cryptographic calculation value required when connecting a new transaction for a certain period to the public ledger of the blockchain. With the system given, people all over the world participated in cryptographic calculations in anticipation of a large amount of reward, and even more, people have virtual currency due to the topicality. As a result, the market prices of major virtual currencies such as Bitcoin have fluctuated significantly, and speculation aimed at opportunities for trading margins has become active, making them financial products with large price fluctuations. In addition, international criminal organizations that have noticed that the scrutiny of the governments of each country does not reach the transaction of virtual currency have also found value in the convenience of virtual currency, and it is a major virtual currency for the "ransom" of hacking cases. Is becoming more common.

Please think carefully about the future of cryptocurrencies concerning the above. The points are, for example, (1) the attitude of each country's government toward virtual currency transactions, (2) the movement of banks to introduce a new international remittance system, and (3) the development trend of blockchain technology.